Semi industry to see flat growth this year, hopes pinned on 2013

The semiconductor market is set for disappointingly flat growth during 2012, but with inventory levels rising due to customer demand there is hope of a resurgence within the coming months.

According to the World Semiconductor Trade Statistics produced along with the Semiconductor Industry Association, the semi market is set to hit $301 billion during 2012. This means just 0.4 percent growth from the previous year.

Part of the reason for this are poor sales in the Asia Pacific region which the WSTS says weighs down the worldwide growth.

The picture for Europe is not much rosier with a potential contraction on the cards this year, perhaps not surprising considering the economic climate. It is in the Americas then that healthier growth is expected, just keeping overall growth in the black for the year.

The good news from the WSTS is that it expects more substantial growth will return to the industry next year. The semi market is expected to grow by 7.2 percent in 2013 to hit $322 billion, followed 4.4 percent in 2014, reaching $336 billion.

According to IHS iSuppli, inventory levels are also indicating that the industry is set for good growth, with greater balance in supply leading to increased confidence in the industry.

Stockpiles held by chip suppliers had risen for the second straight quarter, though each quarter has been for markedly different reasons.

In the fourth quarter of 2011, inventories were on the rise due to uncertainty over economic factors such as the Eurozone crisis, leading to a drop off in demand for semiconductors worldwide.

Customer stockpiles also fell, indicating an overall fall in demand and creating more of a gloomy outlook.

Now, though, inventory levels have increased even further, rising from 47.8 percent of supplier’s revenues to 50.0 percent, however, this is said to be due to a positive surge in demand.

According to semiconductor inventory analyst at IHS, Sharon Stiefel, there is a higher level of inventory among both chip suppliers and customers showing that both supply and demand have “turned positive”.

This is therefore indicative of “better things to come” for the industry, according to Stiefel.

There are some concerns for the industry in terms of oversupply, with the memory segment highlighted as more susceptible to oversupply.

On the whole, though, the industry is expected to see to the ratio of inventory to sales come into greater alignment, with increased demand giving suppliers more confidence going forward.